There are numerous benefits to be had when a hotel owner elects to affiliate with a franchise brand.  The question is do these benefits, over time, continue to justify the cost of membership.

If an owner elects to operate the hotel with competent and experienced management independent of the franchise organization, then the primary benefit of affiliation comes down to revenues generated by the brand or influenced by the reputation of the brand.

Revenues generated by the Brand
These sources of business are not always as easy to document as they may first appear.  At face value, revenues generated through the franchise's central reservation center, GDS/IDS connections, brand website and possibly a national sales organization can be claimed as contributors from the brand.

However, often revenues arriving through these channels originate with direct selling efforts of the hotel or existing
local business relationships.  When looking at the contributions claimed by your franchise, examine carefully the demand
generators.

Revenues influenced by the Brand
Even more difficult to document are revenues that result from the awareness or reputation of the brand.  We know that frequent traveler programs and brand image may influence a guest to select one hotel over another in a given location, even when service is comparable and rate more attractive at the hotel not selected.  The question one must ask is how much business would be lost and at what rate just because of the name change.

Bottom line Justification
Ultimately when you take away all the other "benefits" of brand affiliation, it is incremental revenues that justify franchise
affiliation.  If revenues from the brand can not be reasonably replaced by local efforts and effective use of electronic
marketing resources, then the value of the franchise is justified.

Keep in mind that most franchises assess fees on total hotel revenues, not just those specifically contributed by the brand.  When analyzing costs in relation to reservations generated solely because of the brand, you may find the cost per reservations alarmingly high.  At this point it may be wise to consider alternative affiliations including association memberships or even independence using a third party reservation service provider.

You may find it very possible to realize positive net income from an alternative affiliation even with substantial losses in
both rate and occupancy simply by reducing the costs per reservations generated.  Today there are many effective ways to reach prospective guests and if you are delivering fair value, retain existing business without dependence on a franchise.

Technologies, including the Internet have leveled the playing field with the franchise world if your primary need is revenue
contribution.  There are many third party reservation service providers that can come close to replacing and often exceed
contributions over franchise brands.  These providers typically offer services ala carte and with the exception of fairly modest monthly base support fees (when compared to franchise fees), charge on a per transaction basis versus a blanket percentage of overall revenue.  This means that you only pay for the reservations you receive and the voice calls handled.

In one case we worked with a hotel near an airport affiliated with a major upscale franchise.  Using our reservations
productivity analyzer we examined current production, including calls to the brand's central reservations center, conversion factors, GDS/IDS reservations, website production and the percentage of guests participating in the brand's frequent traveler program.   The effective cost per reservation received through the brand, applying the franchise fee, including marketing and reservations fees on total room revenue was over $50.00.   Utilizing a third party reservations provider, for the same mix of reservations, the cost would be less than $12.00 per reservation.  At that saving, this hotel discovered it could give up over 3% in occupancy and over 3% in ADR and still bring the same dollars to the bottom line.  The hotel took the chance, gave up the flag and is succeeding as an independent hotel.

The decision to retain affiliation with a franchise must come down to ROI – both in terms of real bottom line dollars and the
intangibles of expert advice and image.  If the dollars don't add up, it should at least be worth a second look.  When the
costs fail to deliver the returns you believe you deserve, there are tools and resources available today to help you make an informed decision to retain, change or leave the franchise world.

CVCT, Carol Verret Consulting and Training, offers consulting and seminars on incorporating and using e-tools to enhance
productivity and functionality as well as revenue management and customer service. Our associate, Tony D'Angelo, specializes in HR consulting and seminars. Carol Verret, in association with HotelTraining.com has an online sales training module that deals with New Business Development and developing client profiles by market segment. Contact Carol at carol@carolverret.com and log onto the company web site www.carolverret.com. The company can be reached by phone at (303) 618-4065. Log on for info about live web casts and online training modules that also address these issues.